Gates Says Companies Should Not Outsource Core Functions

Process valuation is taking your core business model and valuing it against corporate strategies. Let's say you make wooden ducks. Obviously you've got a duck manufacturing plant, call center, a duck design department, sales reps, administrative offices, etc.

What parts of these operations are critical? It may surprise you, but it's really impossible to answer that question! The reason is, when we talk about business processes, we usually do something called "functional decomposition" -- it's the way the brain works. We take big functions and break them up into smaller and smaller functions. The tendency is then to figure out which blocks are important and which aren't.

But that's not the whole story. A new method of process identification, called "Use Cases" analyzes process from terms of an outsider to the system. Things called "actors" interact with our system to reach "goals"

A goal might be "order a duck" in which case we would go through the sub-goals, paths and alternate paths, around duck ordering. It sounds like the same thing, but it isn't. Turns out process identification is a little more tricky than it first appears. Don't try this at home!

Once your processes are identified, specified, and mutually orthogonal (hey. I make extra money as a consultant using words like "orthogonal") then comes time for a valuation exercise. We'll cover that later, suffice it to say that here is where you identify what's important and what isn't in terms of dollars and cents And if you don't know what's important and what isn't, how can you make informed decisions?